HELSINKI, April 29 (Reuters) - Nokia named the
man who led a turnaround at its main telecoms network business
as its new chief executive on Tuesday, boosting investors'
confidence in the future of the company following the sale of
its once-dominant handset arm.

The Finnish company, which completed the 5.6 billion euro
($7.8 billion) deal to sell its mobile handset business to
Microsoft on Friday, said Rajeev Suri would become CEO
on May 1, replacing Microsoft-bound Stephen Elop.

It also announced forecast-beating quarterly results, driven
by cost-cutting and software deals at its networks arm, formerly
called NSN, and plans to return $3.1 billion to shareholders,
helping to lift its share price by more than 7 percent.

"Mr. Suri has done a very commendable job in turning around
NSN, in our view. Thus, we see the market being positive about
his appointment," JP Morgan Cazenove analysts said.

Suri, a 46-year-old Indian national, was widely expected to
lead the company after the sale of the handset business.

Nokia's networks division accounted for about 90 percent of
sales from the group's continuing businesses last year. But
analysts say it faces challenges, as higher research and
development costs give bigger, deep-pocketed telecom equipment
makers such as industry leader Ericsson and China's
Huawei an advantage.

Still, Nokia beat expectations with a core operating profit
margin of 9.3 percent in the first quarter, well ahead of the
5.7 percent average forecast by analysts polled by Reuters.

The margin is also expected to remain at the higher end of a
5-10 percent target for this year, the company added.

"On first-quarter results, NSN steals the show with a solid
margin beat and expanded 2014 (guidance)," Jefferies analysts
Lee Simpson and Robert Lamb said in a note.

Following the sale of its handset business, analysts have
speculated that Nokia might seek to buy struggling rival
Alcatel-Lucent, or at least its mobile products, which
would boost the Finnish company's position in the United States.

Asked about potential acquisitions, Suri told Reuters in a
telephone interview that small deals are possible.

"In terms of larger players, if there is something that
makes sense, of course I will recommend that to the board. But
... it needs to be a wisely thought-out thing," he said.

"We will be open to the opportunities but (there's) no need
to rush."

Suri said all three of Nokia's business areas - in addition
to the networks unit, it has navigation and patents businesses -
had opportunities for organic growth, without acquisitions.

"In a world where everyone and everything will be connected,
there will be more and more synergies between the three
businesses as we move forward," he added.

The company could look to sell combined patent and
technology licences, he said, adding that it could potentially
license its brand as well and could even return to consumer
electronics business in the long term, utilising expertise it
still has in that area.

In a conference call with analysts, he also said that the
company has won several unannounced contracts in Europe.

KEEPING INVESTORS ONBOARD

Nokia's once industry-leading mobile handset business fell
behind rivals such as Apple and Samsung in
moving into smartphones, and a turnaround drive by outgoing CEO
Elop failed to deliver quick results.

The company's shares, which traded at more than 28 euros in
2007, plunged to as low as 1.33 euros in 2012, before recovering
somewhat, mainly in the wake of the Microsoft deal. Nokia was
the biggest gainer among European blue-chip stocks
in early trade, up 7.2 percent to 5.51 euros at 0910 GMT. The
shares drifted slightly in the afternoon but were still up 2.9
percent at 1531 GMT.

In a bid to keep investors onside while it changes focus,
Nokia said it would pay an extra 1 billion euros ($1.4
billion)in dividends for last year and start a 1.25 billion euro
share buyback programme.

The extra dividend of 0.26 euros per share is on top of the
annual dividend of 0.11 euros for last year. The ordinary
dividend will cost the company another 400 million euros, or
about half of Nokia's earnings for last year.

"The dividend proposal is slightly smaller than expected,
but the buyback program is quite extensive. It reflects the
management's view that the stock is valued below its
sum-of-parts," said Inderes analyst Mikael Rautanen.

Nokia said it would cut debt by 2 billion euros, which would
save it about 100 million euros in interest annually.

Suri said he expects the improved finances to lift Nokia's
credit rating back to investment grade and that he is
"absolutely fixated" on that goal.

Nokia said its net cash position at the end of March was 2.1
billion euros, down from 2.3 billion at the end of last year.
Had the handset unit sale closed in the first quarter, the net
cash position would have been 7.1 billion euros, Nokia added.
($1 = 0.7223 Euros)
(Editing by Mark Potter and David Goodman)